Maryland Suspends Gas Tax to Offset Inflation at the Pump

The gas tax holiday will save Maryland drivers about 36 cents per gallon for gasoline and roughly 37 cents per gallon for diesel fuel.

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As gas prices surge across the country, the federal government and various states are considering gas tax holidays – that is, temporarily suspending gas taxes to help bring down the price of fuel for consumers. On March 18, Maryland became the first state in the country to actually enact a gas tax holiday this year, which takes effect immediately and will last for 30 days.

According to AAA (opens in new tab), the average price for a gallon of regular unleaded gas in Maryland on the first day of the state's gas tax holiday was about $4.17 per gallon. Suspending the state's fuel taxes will save Marylanders 36.1¢ per gallon on purchases of gasoline, and the 36.85¢ per gallon for diesel fuel.

Before signing the bill, Gov. Larry Hogan (R) noted that, "as Marylanders face the impact of surging inflation, with the average price of gas rapidly rising, this bipartisan action will provide some relief from the pain at the pump." But there are questions across the country concerning exactly how much relief gas tax holidays actually provide, and whether the level of savings per person justify the overall loss of revenue.

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A Marylander who drives 12,000 miles a year in a car that averages 25 miles per gallon will save a less than $15 in gasoline taxes during the 30-day suspension. On the other hand, according to the governor's office, the suspension is expected to cost the state close to $100 million, which will be covered indirectly by the state's record budget surplus.

The governor is also backing legislation that would suspend automatic increases in the state's gas tax. So, more gas tax relief may be on the way for Marylanders.

Georgia also enacted a gas tax holiday on March 18. It will last until the end of May. Whether gas-tax relief measures to offset inflation at the pump move forward in other states remains to be seen. Florida may be the next state to enact a gas tax holiday. The state legislature passed a bill that would suspend the state's fuel tax for 30 days – but not until October. On the federal level, efforts to suspend the national 18.4¢ per gallon gas tax appear to be stalled.

Rocky Mengle
Senior Tax Editor, Kiplinger.com

Rocky is a Senior Tax Editor for Kiplinger with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.